AMC Entertainment Holdings, Inc
AMC Entertainment Bondholders Organize With Milbank Amid Unsecured Subordinated-for-Second-Lien-Notes Exchange Offer
Thu 06/04/2020 11:35 AM
A group of bondholders of AMC Entertainment’s 2024, 2025, 2026 and 2027 subordinated notes has organized with Milbank as legal advisor and has been evaluating the terms of the movie theatre chain’s exchange offer announced Wednesday, June 3, according to a press release from Milbank reviewed by Reorg.
The ad hoc group consists of holders that own a majority of multiple subordinated notes tranches and will be having an information call on June 5, the press release said.
AMC announced an exchange offer for its four series of subordinated notes Wednesday, seeking to swap them into up to $640 million of new 12% cash/PIK second lien notes due June 15, 2026, at an early tender price of between 51 cents to 66 cents on the dollar. If the company receives the consents from holders of a majority of each series of the sub notes, then the $640 million new notes cap will be lifted, and any and all sub notes tendered will be accepted.
The exchange offer is conditioned on the consent of Silver Lake Group, which owns a majority of AMC’s $600 million 2.95% convertible notes due 2024. According to the press release for the exchange offer, the convertible notes, as part of a separate exchange, would be granted a first-priority lien on the collateral securing the credit facilities. AMC said it expects to either enter into an amendment to the converts’ indenture or conduct an exchange to extend the maturity of the notes to May 1, 2026, and, in either case, grant a first-priority lien on the collateral to secure the convertible notes.
The company provided a pro forma capital structure in an 8-K:
Included in the 8-K, the company warned that substantial doubt exists about AMC’s ability to continue as a going concern “for a reasonable period of time.” The company said that it has begun to ramp up its cash spending with the intention of reopening theatres this summer and believes that it has the cash resources to reopen and resume operations. However, the company said that its liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and its ability to generate revenue, adding, “If we do not recommence operations within our estimated timeline, we will require additional capital.”
The company is working with Moelis as financial advisor, according to sources.
AMC Entertainment did not immediately respond to a request for comment. A representative for Moelis declined to comment.
--Harvard Zhang
The ad hoc group consists of holders that own a majority of multiple subordinated notes tranches and will be having an information call on June 5, the press release said.
AMC announced an exchange offer for its four series of subordinated notes Wednesday, seeking to swap them into up to $640 million of new 12% cash/PIK second lien notes due June 15, 2026, at an early tender price of between 51 cents to 66 cents on the dollar. If the company receives the consents from holders of a majority of each series of the sub notes, then the $640 million new notes cap will be lifted, and any and all sub notes tendered will be accepted.
The exchange offer is conditioned on the consent of Silver Lake Group, which owns a majority of AMC’s $600 million 2.95% convertible notes due 2024. According to the press release for the exchange offer, the convertible notes, as part of a separate exchange, would be granted a first-priority lien on the collateral securing the credit facilities. AMC said it expects to either enter into an amendment to the converts’ indenture or conduct an exchange to extend the maturity of the notes to May 1, 2026, and, in either case, grant a first-priority lien on the collateral to secure the convertible notes.
The company provided a pro forma capital structure in an 8-K:
Included in the 8-K, the company warned that substantial doubt exists about AMC’s ability to continue as a going concern “for a reasonable period of time.” The company said that it has begun to ramp up its cash spending with the intention of reopening theatres this summer and believes that it has the cash resources to reopen and resume operations. However, the company said that its liquidity needs thereafter will depend, among other things, on the timing of a full resumption of operations, the timing of movie releases and its ability to generate revenue, adding, “If we do not recommence operations within our estimated timeline, we will require additional capital.”
The company is working with Moelis as financial advisor, according to sources.
AMC Entertainment did not immediately respond to a request for comment. A representative for Moelis declined to comment.
--Harvard Zhang
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